The UK’s Heat Pump Strategy is in DEEP Trouble

Here in the UK, the Government is trying to persuade householders to replace their gas boilers with heat pumps.  It’s a key part of their net zero strategy, tackling the 13% of CO2 emissions that are attributable to gas-based home heating.  The “one size fits all” message is “Heat Pumps Good, Gas Boilers Bad”.  The Government has set a target of installing 600,000 heat pumps each year by 2028, rising to 1.6 million annually by 2028.  To help achieve this, they have introduced a Boiler Upgrade subsidy, but the latest Government statistics show that only 16,959 applicants have replaced an existing gas boiler with a heat pump since the scheme began in May 2022, which is a little bit short of the 1.4 million target for that period

These targets were set without much understanding of the difficulty or cost of retrofitting heat pumps.  Much of Britain’s housing is old and not very suitable for conversion.  Having set the policy, the Government initiated a major study in 2019 called DEEP – the Demonstration of Energy Efficient Potential, to provide evidence to justify it.  DEEP’s remit was to quantify the real effects, costs and returns of upgrading the structure of older houses.  They’ve just published the results, which basically says it’s not economic for these older properties.  It suggests that the payback time for heat pumps in older homes, along with the insulation upgrade to make them suitable is “generally over 100 years”.   So, where does that leave the plan?

Britain is not alone in trying to get rid of gas boilers.  Around Europe, other countries are doing the same, and Nesta published a good review of their progress (or lack thereof) last year.  However, each country has different problems.  There is no questioning the fact that Britain has the greatest problem, largely because we have the least energy efficient housing stock in the developed world.  There are plenty of reasons for that, of which the gulf stream is a prime one.  It means we have an unusually mild climate which rarely gets too hot or too cold.  Because of that, most houses weren’t designed to deal with extreme temperatures, so have very limited insulation.  Until a few decades ago, single brick external walls and single glazed windows were the norm.  A penchant for home ownership, embodied in the mantra that “every Englishman’s home is his castle” has led to developers building cheaply to make homes affordable.  Exacerbating that, successive Governments have bowed to lobbying by the building industry, pushing back on any regulation that would increase cost. 

Britain has a lot of history.  A significant number of homes are over a hundred years old, when the most important structural requirement for builders was the short term one that the house didn’t fall down before they got paid.  Insulation and energy efficiency never appeared on the sales prospectus, as the Victorians had cheap coal to burn.  In the 1930s, during a building boom, gas was readily available and cheap.  As a result, we have over 9 million homes that need a major upgrade if they are going to replace their gas boilers.  They’re a key focus of Government policy, as they are currently producing around 13% of the UK’s CO₂ emissions.

Heat pumps look like a good option for these homes, but there’s a problem.  Whereas gas boilers typically push water around the radiators at 70°C, most heat pumps only heat it to 50°C.  If you’re thinking of installing a heat pump, wait for a cold day and turn your boiler temperature down to 50°C and see if the house is warm enough.  If it is, go ahead with the heat pump.  If it’s not, you need to look at insulating your home.  The question is how much that will cost.  Which is where DEEP comes in.

The DEEP project involved fitting varying degrees of insulation to 14 older houses, one of which was the Salford Energy House test facility.  The upgrades included a combination of draught-proofing, loft or room-in-roof insulation, new windows and doors, ground floor insulation, and solid wall insulation (SWI).  Solid wall insulation could achieve between 19% and 55% reductions in heat loss, equivalent to between a 7% and 38% fall in fuel bills, but other single retrofits only achieved fuel bill savings between 0 and 8%.  The figure below, from the DEEP 1.0 report shows averaged results for five homes where all the options above were applied.

The diagram shows the Heat Transfer Coefficient (HTC), which is a measure of the overall efficiency of the insulation.  It shows quite clearly that the lower cost improvements – roof, floor, windows and doors, didn’t have much impact on overall home performance.  They improved comfort (which I can attest to, having done those upgrades myself), but not to the point where a heat pump would work.  Implementing those lower cost interventions and installing a heat pump would just take the chill off a house – it wouldn’t warm it.  To reach that level required solid wall insulation.  However, installing solid wall insulation is costly and poses the risk of unintended consequences, including condensation, mould and summer overheating.  Typical costs for solid wall insulation, with the concomitant requirement of eave extension and better ventilation are in excess of £15,000.

DEEP 2.0 digs into more detail of the likely return on investment, or the lack of it.  The report concludes that “Generally, the payback times for the DEEP case study retrofits are of the order of many decades and commonly over 100 years”.

One of the most interesting of the set of reports is DEEP 5.02, which is the case study of the Salford Energy Test House.  This is a test facility which contains a replica Victorian solid wall end-of-terrace house constructed within an environmental chamber capable of replicating external air temperatures between -12 °C and +30 °C. It was built using reclaimed materials and traditional construction methods of the time and can be retrofitted to most fabric thermal performance standards.  It has a range of heating options including gas boilers and an air source heat pump.  It’s a really impressive facility to get accurate results.

This case study looked at the effect of each insulation improvement, and its effect on running costs of both the gas boilers and the heat pump.  It included an unintentional, but rather informative experiment.  At the end of the trial, it was discovered that the heat pump had been connected incorrectly, with the flow and return connections to the external unit accidentally swapped.  The faulty installation resulted in a lower performance, which meant running costs were around 50% higher than expected.  The report states that the ASHP installation error by a highly experienced heating engineer may be symptomatic of a wider ASHP installer skills gap. In other words, we don’t have enough trained engineers to fit heat pumps, even at the current level of installations, which is barely more than 1% of the Government fitting target. 

I sit on a Conservation Area Advisory Committee and see a regular stream of planning applications from people wanting to retrofit heat pumps to Victorian houses.  Most probably won’t work, as they’re not fitting solid wall insulation.  But these are from owners who can afford to execute a greenwashing activity.  Most can’t.  If we take an average upgrade cost from the DEEP reports for full home insulation and a heat pump, it’s around £25,000 per home.  Across the 9 million homes that need an insulation upgrade to make a non-gas future possible, that’s a national cost of around £225 billion, which the Government thinks will be largely met by home owners.  In contrast, the Office for Budget responsibility thinks that the entire UK cost for attaining net zero is only £321 billion.  Something is not adding up.

The DEEP reports do not have any answers – they are just providing evidence.  Its conclusions tend to reinforce the message that Ross Clark explains in his book “Not Zero”, which is that Britain has set about solving climate change in an atmosphere of panic and end-of-times rhetoric” with little idea of how to achieve it.  What is clear from the DEEP information is that the current approach of fitting of heat pumps in these 9 million homes is not a cost effective option.  Their findings lead to some actions which need to be fed into energy policy:

• The Government needs to accept that continuing to use gas for home heating is the only option for at least nine million homes in the medium to long term.
• Replacement gas boilers need to be available for these homes until an alternative solution is developed, which is unlikely to be before 2040.
• That requires the continued existence of a gas distribution network until at least 2050, and probably until 2060.  (As it will take 15 years to upgrade the remaining homes once we have an alternative solution.)

The most likely solution is the availability of high temperature heat pumps.  They won’t save homeowners money, as they are less efficient, so cost more to run.  But they won’t need solid wall insulation to keep a house as warm as it is today.  Most of the development here is coming from startups, which is where investment needs to be focused.   It’s unlikely these heat pumps will be affordable and available at scale for another 15 years, but they provide a pragmatic route to decarbonisation.  There is hydrogen, but nobody who has worked with it believes it is much more than a fantasy.

The most important takeaway from the DEEP data is that the decarbonisation of gas-based home heating is not going to happen by 2050 and probably won’t be complete by 2060.  Where houses are already well insulated, alternatives like heat pumps and district heating need to be encouraged, but not at any cost.  We also need to appreciate the installation errors with the heat pump in the Salford Test House and invest in training builders, plumbers and architects to design and construct the most efficient new homes and heating upgrades.  Otherwise, we risk turning decarbonisation into a major cowboy industry.

The 2050 net zero mandate was signed into law with virtually no evidence.  Now that we are beginning to get the evidence, it’s clear that this was not thought through.  It’s time to apply pragmatism, accelerate what is possible, invest in new technology which is missing and accept that some areas will not get to net zero for several more decades.  Most importantly, policy decisions need to reflect what is possible, rather than believing in dreams.